Back in 2016, the Trumpistas told us that the economy was a disaster. Trump himself talked of economic “carnage” in his inaugural address. When people pointed out that unemployment had recently fallen from 10% to 4.6%, they said those numbers were meaningless, and that the actual unemployment rate was as high as 30% or more. We were told that the real issue was the huge trade deficit, which was decimating the American economy. Those who pointed to “phony unemployment data” and ignored the trade deficit were nothing more than apologists for global neoliberalism.

Today the Trumpistas insist that the economy is in superb shape even though, as Tyler Cowen points out in a recent post, imports are surging and the trade deficit is getting larger.

I actually don’t have any big problem with Trumpistas saying the economy is in good shape, as long as they acknowledge that they have become the loudest apologists for global neoliberalism. If they aren’t willing to acknowledge that fact, then what basis do they have to insist that the economy is in great shape? RGDP growth? It was just as fast around 2014-15. Unemployment? It fell from 10% to 4.6% even before Trump was elected. Stocks? They soared dramatically higher under Obama. The big Trump issue is and always has been the trade deficit. That’s how he wants to be judged, and that’s how I’ll judge him.

So Trumpistas should either take credit for continuing Obama’s policy of selling out to global neoliberalism with a policy of big trade deficits, falling unemployment, and soaring stock prices, or else keep their mouths shut.

Even if Mr Trump were gone tomorrow, nobody today in the US could run for president and win on a “let’s go back to the 1990s” platform. Laissez-faire trade and globalisation in general are under fire in the US (as well as in Europe and any number of developing countries).

Where is the evidence for this claim? Why can’t we go back to the 1990s? Polls show that support for free trade agreements is stable over time, and that young people and minorities are far more supportive of free trade than older people. Why is it assumed that our future is inevitably more protectionist? Aren’t the young and minorities our future?

Interesting , but it seems that you have ignored one important pledge or of Trump ( regarding the economy under his leadership ) and it is :

The off shore money . He had promised over and over , to bring those half trillion off shore back to the US . In fact , the tax reform , meant to do it ( among other ) . We shall see further in the future , to what extent it has been achieved if at all .

P.S : including the boosting of employment , by transferring American factories , from abroad , back to the US .

Of course it does matter !! First of all , for Trump himself . But this is subjective not objective .

More objectively , if it would reside in American banks , it would improve their financial balance , and in turn , would improve also , the US economy .The financial situation of banks in the US , affects clearly the economy and the stock markets of course .

But such money , doesn’t have necessarily to reside in banks . It is assumed for example , that more dividends shall be allocated or distributed so ( within the US , for stake holders and executives and so forth …) .

I wrote half trillion , but most of estimations are far greater than that . In that last link for example posted above , it is estimated that 3.1 trillion resides abroad as offshore money . Others mention 1.4 trillion , it does vary.

These surveys that ask lay people about complex macroeconomic issues…well.

I think you can get any result, depending on the wording of survey and perhaps current news events.

If China tomorrow sank a US warship that had wandered into the periphery of South China Sea (Beijing claims the expansive sea is a China lake), then suddenly advocates for “free trade” would go into hiding.

It is curious that older whites are so skeptical about the merits (as advertised) of “free trade.” I am an older white and I am skeptical.

A blind spot due to time and place of birth? Or more experience? Less trust in theories and more in concrete results?

While the nationalists look offensive, the globalists look glib.

Another thought: We are offended when a Russia tries to tilt a US election, and the Aussies are in a pique that China tried to tilt some elections down under.

El Roam. What if it’s moved from American banks in Europe to foreign banks in the US?

And where are all the jobs that Trump promised? Job growth in America slowed after Trump took office. Wasn’t the whole point to create jobs?

Ben, You said:

“It is curious that older whites are so skeptical about the merits (as advertised) of “free trade.” I am an older white and I am skeptical.”

But that’s because you want the US to emulate countries poorer than Mexico, like China.

You said:

“A blind spot due to time and place of birth? Or more experience? Less trust in theories and more in concrete results?”

Have you ever bothered to look at the international correlation between openness to trade and living standards? Hint, the “concrete result” is that there is a very powerful and positive correlation. My hunch is that when you say “concrete result” you actually mean “uninformed Trumpian prejudice”

If it does move to foreign banks , it wouldn’t matter necessarily . What counts , is that the money would serve also the US economy , not solely other foreign economies. It’s like having a foreign factory within the US , so , it is owned by foreign entities , but , it does contribute to the US economy :

Concerning Trump and employment , you are right , for the level of unemployment has fallen more and more in time ( Thanks to Ben bernanke by the way , and not Obama or someone else , but Bernanke ) And can’t be really attributed to Trump .

So as written by me :

We shall wait and see , whether and to what extent , the policy of Trump , shall succeed simply .

Sumner, why not instead judge Trump by the year-over-year growth rate of manufacturing jobs? In November 2016, manufacturing jobs were down an eighth of a percent from a year ago; now, they are up 2% from a year ago, a growth rate higher than any point since 1995.https://fred.stlouisfed.org/series/MANEMP

Harding, Look a the graph in the link. Does that looks statistically significant to you? Or does it reflect the oil price cycle, with job growth down in periods when low oil prices slash investment in oil equipment?

Kevin Dick wrote: “I try to point out to people that “trade deficit” is a misnomer. What we really have is a “stuff surplus”. People send us more stuff than we send them…What great deal maker wouldn’t want to get more stuff by giving up less?…Macron and Trudeau should be mad at Trump because the US is getting more than its fair share of stuff.”

Mr. Dick, it’s true that the first way to unravel modern-day mercantilism is to point out that a current account deficit is the flipside of a capital account surplus. But you have pushed things too far above, which leads you into the position of thinking countries with a trade surplus are somehow getting screwed over.

No, that’s wrong. (Do you think it would be good for these countries to enact trade barriers to reduce the leakage of “stuff” from their people?)

I spell it out here if you’re curious. But put it in an individual context: If a person runs up credit card bills by going on vacations even though he has no job, do you congratulate him on his stuff surplus?

“You should be happy about Trump. There could not be a worst spokesman for a re-examination of trade policy.”

I am happy that Trump is the protectionist spokesman, he’s making free trade more popular in America. Especially among the Democrats.

As for the 7% import tax in Singapore, you do know that’s Trumpian fake news, don’t you? Trump doesn’t know the difference between a VAT and a tariff, but I’d expect someone like you to understand.

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Welcome to a new blog on the endlessly perplexing problem of monetary policy. You’ll quickly notice that I am not a natural blogger, yet I feel compelled by recent events to give it a shot. Read more...

Bio

My name is Scott Sumner and I have taught economics at Bentley University for the past 27 years. I earned a BA in economics at Wisconsin and a PhD at Chicago. My research has been in the field of monetary economics, particularly the role of the gold standard in the Great Depression. I had just begun research on the relationship between cultural values and neoliberal reforms, when I got pulled back into monetary economics by the current crisis.